Along a short-run aggregate supply curve, output is related to unexpected movements in the ______. Along a Phillips curve, unemployment is related to unexpected movements in the ______.
A) price level; inflation rate
B) inflation rate; price level
C) unemployment rate; price level
D) price level; level of output

Question

Quizplus · Accepted Answer

In the context of macroeconomics, the short-run aggregate supply curve illustrates how output (or real GDP) responds to changes in the price level, particularly when those changes are unexpected. Similarly, the Phillips curve demonstrates the relationship between unemployment and inflation, where unexpected movements in the inflation rate can affect unemployment levels. Thus, option A correctly pairs output with the price level along the short-run aggregate supply curve and unemployment with the inflation rate along the Phillips curve.

Along a Short-Run Aggregate Supply Curve, Output Is Related to Unexpected